Former GE Capital Bank Ordered to Pay $225 Million in... - Legal News

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site.
Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site.
Compensation from our advertising partners impacts how and where their products appear on our site,
including, for example, the order in which they may appear within review lists.
Credit-Land.com has not reviewed all available credit card offers in the marketplace.

The CFPB has ordered GE Capital to pay $225 million in consumer relief, the largest credit card discrimination settlement the federal government has ever imposed. Fifty-six million will go to about 638,000 people who were victims of deceptive marketing, and $169 million will be awarded to approximately 108,000 consumers who were discriminated against due to national origin.

Announcing the CFPB’s decision, director Richard Cordray said the agency “will continue to take action against marketing tactics that trick consumers into buying credit card products they do not want or cannot use. Consumers also deserve to be treated fairly no matter where they live or what language they speak.”

GE Capital Bank, which adopted the name to Synchrony Bank on June 2, 2014, has its headquarters in Utah and has assets of more than$39 billion. Their store-branded credit cards are carried by consumers across the United States and offered by many merchants. GE Capital self-reported the issue of discriminatory practices to the CFPB in 2012 and a joint investigation by the CFPB and the Department of Justice resulted. The investigation began in December 2013 and concluded in February 2013.

Add-on products deceptively marketed

Five add-on products offering cardholders debt-cancellation services were the heart of the deceptive marketing investigation. The products, Card Security, Account Security, Account Security Plus, Debt Security, and Debt Security Plus, were marketed to consumers as ways to cancel out a percentage of their debt if they lost their jobs, became disabled, or experienced other unexpected events that caused them to be unable to make payments on their balances.

However, telemarketers told people the products would be free if they paid off their balances. This was only true if the account was not being used, or if the balance had been paid in full before the monthly statement was issued. They also did not disclose to customers that they might not be eligible for the products, and charged them anyway. Marketers did not properly disclose that customers were purchasing a product, but made it seems like they were updating their account or claiming a benefit. Salespeople also told folks that the products were only available for a limited time, creating a false sense of urgency. The products’ availability was in fact not limited to any timeframe.

Discrimination against Hispanic populations

GE Capital also made settlement offers to certain customers who were struggling to pay off their balances and bring their accounts into good standing. However, these offers were not made to anyone with a mailing address in Puerto Rico, or any customer who preferred to receive communications in Spanish. This is a violation of the Equal Credit Opportunity Act (ECOA), which says that credit issuers may not discriminate based on race or national origin.

In addition to paying the consumer relief funds in a convenient and timely manner, GE Capital was ordered to end deceptive marketing practices and put a stop to illegal discrimination. They must also pay a $3.5 million penalty to the CFPB Civil Penalty Fund.

All credit cards terms, fees and rates mentioned in this article/post are actual on the posting date. See the current products’ Terms & Conditions on the issuing banks' websites.

USAA took the top spot when it comes to delivering customer satisfaction for the fourth year in a row, according to a consumer study. Discover and American Express tied for second place. HSBC came in last of the 11 credit cards reviewed.Continue reading

People's United Bank and Elan Financial Services have rolled out six new credit cards including the World Elite, World Bonus Rewards, World Bonus Rewards PLUS, Platinum, College and Secured cards.Continue reading

Enter your e-mail address to subscribe to the latest CreditLand news, articles, and expert advice for FREE.
CreditLand will never share your e-mail address with any third parties.
You may unsubscribe at any moment by simply clicking the Unsubscribe link in any of CreditLand's newsletters.

* The Credit-Land.com webpage is a free service and an information resource for credit cards and financial products and services available to eligible United States consumers.
Credit-Land.com does not offer any warranties and is not a direct service. There are no guarantees for approval or offers when applying for a credit card.
Please refer to the application if you would like more information on each credit card.
When you click "Apply" for a particular credit card, please take the time to review the terms and conditions of the product/service at the issuer's website.
All logos on the Credit-Land.com website are property of their respective owners.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer.
Opinions expressed here are the author's alone, not those of the credit card issuer,
and have not been reviewed, approved or otherwise endorsed by the credit card issuer.
Reasonable efforts are made to present accurate info, however all info is presented
without warranty. Consult a card's issuing bank for terms & conditions.

User Generated Content Disclaimer: These responses are not provided or commissioned by the bank advertiser.
Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser.
It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site.
Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists.
Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Please note that Credit-Land.com has financial relationships with some of the merchants mentioned here.
Credit-Land.com may be compensated if consumers choose to utilize the links located throught the content on this site and generate sales for the said merchant.